U.S. Stocks May Come Under Pressure Amid Rising Treasury Yields

Following the mixed performance seen in the previous session, stocks are likely to move mostly lower in early trading on Wednesday. The major index futures are currently pointing to initial weakness on Wall Street, with the S&P 500 futures down by 0.7 percent.

A continued increase by treasury yields may weigh on Wall Street, as the yield on the benchmark ten-year note is seeing further upside after jumping above 4.5 percent to its highest levels in nearly a month on Tuesday.

The advance by treasury yields is likely to add to recent concerns about the outlook for interest rates ahead of key inflation data later in the week.

On Friday, the Commerce Department is due to release its report on personal income and spending in the month of April, which includes readings on inflation said to be preferred by the Federal Reserve.

The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed’s next monetary policy meeting on June 11-12.

In an interview with CNBC on Tuesday, Minneapolis Fed President Neel Kashkari said he needs to see “many more months of positive inflation data” before he would consider cutting interest rates.

Kashkari, who does not have a vote on the rate-setting Federal Open Market Committee this year, also said he could not rule out raising interest rates if inflation fails to slow.

Traders may also look to cash in on recent strength in the tech sector, which drove the Nasdaq to a new record closing high on Tuesday amid a surge by shares of Nvidia (NVDA).

Among individual stocks, shares of Marathon Oil (MRO) are moving sharply higher in pre-market trading after the energy company agreed to be acquired by ConocoPhillips (COP) in an all-stock transaction value at $22.5 billion, including $5.4 billion in debt.

Sporting goods retailer Dick’s Sporting Goods (DKS) is also seeing significant pre-market strength after reporting better than expected fiscal first quarter results and raising its full-year guidance.

On the other hand, shares of America Airlines (AAL) are likely to come under pressure after the airline lowered its second quarter earnings guidance.

After moving in opposite directions early in the session, the Nasdaq and the Dow turned in a mixed performance throughout much of the trading day on Tuesday.

While the Nasdaq briefly joined the Dow in negative territory in afternoon trading, the tech-heavy index rebounded to end the day at a new record closing high.

The Nasdaq climbed 99.09 points or 0.6 percent to 17,019.88, adding to the strong gain posted last Friday. The S&P 500 also inched up 1.32 points or less than a tenth of a percent to 5,306.04, while the Dow slid 216.73 points or 0.6 percent to 38,852.86, extending the sharp pullback seen last week.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.8 percent, while Hong Kong’s Hang Seng Index plunged by 1.8 percent.

The major European markets have also moved to the downside on the day. While the French CAC 40 Index has tumbled by 1.3 percent, the German DAX Index is down by 1.0 percent and the U.K.’s FTSE 100 Index is down by 0.4 percent.

In commodities trading, crude oil futures are climbing $0.54 to $80.37 a barrel after surging $2.11 to $79.83 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,364.30, down $15 compared to the previous session’s close of $2,379.30. On Tuesday, gold jumped $22.40.

On the currency front, the U.S. dollar is trading at 157.16 yen compared to the 157.17 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0849 compared to yesterday’s $1.0857.

Business News